From the uncertainty of Brexit to the supply chain disruption and labour shortages caused by the global coronavirus pandemic, the construction industry has been through a challenging time recently. So, is the sector finally ready to bounce back?
Research carried out by construction business funding experts, Bibby Financial Services, reveals that it very well could be. And the green shoots of optimism are driven in no small part by the resilience and positivity of the sector’s SMEs.
Despite SMEs and subcontractors being among the hardest hit during the height of the pandemic, the BFS findings suggest they’ve weathered the storm successfully, with 50% of businesses reporting an increase in activity since lockdown restrictions began to lift, and 35% boasting fuller order books than even before the pandemic. On average, firms now have 20.3 weeks of work in the pipeline, and the value of those contracts is also increasing. These are all strong signs of positive things to come.
However, BFS also found that businesses throughout the sector are experiencing challenges. Not least those brought on by the on-going materials shortage and the rising costs and delays that go along with it. The report even highlights this as a major issue that the industry must either overcome or adapt to if growth and recovery are to continue.
The seriousness of the situation is also weighing heavily on the minds of business owners. 58% of subcontractors now see rising costs and shortages as the biggest threat to their business, and 40% have looked for new suppliers because of it.
BFS’s research also portrays a shifting power dynamic within the industry, once again fuelled by the rising costs of raw materials. Subcontractors are no longer willing to shoulder the risk forced on them by traditional fixed price contracts, with the number of disputes already on the rise.
To see the fuller picture, and to understand more about how construction businesses are reacting to these, and other issues affecting the industry, download and read the full report.
This article was paid for by Bibby Financial Services